Fidelity Investments sees jump in 2011 profit despite suffering fund outflows

City A.M. Reporter
FIDELITY Investments, hit by another year of massive outflows from its stock mutual funds, said operating profit in 2011 rose 13 per cent to $3.3bn due to careful expense management.

Fidelity is one of the world’s largest asset managers. Total assets under management were $1.52 trillion in 20l1, down four per cent from $1.59 trillion in 2010.

In its report, Fidelity conceded “index and exchange-traded funds continued to capture market share from actively managed funds, while extremely low interest rates led to outflows from money market funds.”

However, Fidelity offset declines in its bread-and-butter stock funds business by being the leading US‚Äąprovider of 401(k) and retirement planning services. Total customer assets at Fidelity were $3.39 trillion at the end of 2011, compared with $3.48 trillion in the previous year.

Fidelity, however, said it experienced total outflows of $20.1bn in 2011. Equity funds, in particular, continued to bleed assets, experiencing outflows of $46.1bn, Fidelity said in its annual report to shareholders. Money market funds had outflows of $16.1bnduring the year.

Fidelity, which is privately held, said overall equity performance lagged the prior year, with equity funds outperforming 53 per cent of peers in 2011, down from 59 per cent in 2010.